What Happened?
Shares of digital advertising platform The Trade Desk (NASDAQ: TTD) jumped 4.5% in the afternoon session after investors reacted positively to news that a key competitor, Google, faced an antitrust trial that could force the breakup of its advertising technology business.
The U.S. Department of Justice and a coalition of states started a trial seeking to make Google sell parts of its ad operations, including its ad exchange, AdX. This legal battle followed a judge's prior ruling that Google illegally monopolized the digital advertising market.
A forced sale or restructuring of Google's ad tech stack could significantly reshape the industry and create a more level playing field. Such a development stood to benefit rival ad tech platforms like The Trade Desk, which could gain market share if Google's dominance was curtailed.
The shares closed the day at $46.14, up 3.8% from previous close.
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What Is The Market Telling Us
The Trade Desk’s shares are very volatile and have had 27 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 12 days ago when the stock dropped 7.9% on the news that Morgan Stanley downgraded the stock and significantly lowered its price target.
The investment bank changed its rating on the advertising technology company to "Equalweight" from a more bullish "Overweight."
Alongside the downgrade, Morgan Stanley also slashed its price target on the shares to $50 from a previous target of $80. Such a notable revision from a major Wall Street firm suggests a more cautious view on the company's future performance, which often prompts a sell-off from investors. This action indicates that the analyst sees less upside potential for the stock in the near term.
The Trade Desk is down 60.8% since the beginning of the year, and at $46.10 per share, it is trading 67% below its 52-week high of $139.51 from December 2024. Investors who bought $1,000 worth of The Trade Desk’s shares 5 years ago would now be looking at an investment worth $985.63.
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